Draghi

BOFAML

Vigilant Of Second Round Effects

BoAML | We have remained quite bearish on Euro area inflation for the past few years, particularly compared with ECB forecasts (but also consensus), and have highlighted the many downside risks to the inflation outlook.



ECB walks

Draghi Keen Not To Add Fuel To The Controversy Of Helicopter Money

UBS | As expected, yesterday’s ECB meeting provided neither new stimulus nor major new guidance on the policy outlook. The discussion was dominated by helicopter money (which according to Mr Draghi has not been discussed), the German criticism of the ECB’s low interest rate policy (which Mr Draghi diplomatically rejected) and the issue of whether or not interest rates could go down further (which could happen, if necessary).


BCE.TC

The ECB Can Only Wait For Now

BofAML | No surprises. We do not expect any ECB action this week. After the package in March, we think the ECB will have a few months before going back to the drawing board. Dovish Fed tones and EUR appreciation do not help the ECB, but action beyond a reiteration of forward guidance seems very unlikely.


resilience

Resilience? Not Yet

Francesco Saraceno | Last week the ECB published its Annual Report, that not surprisingly tells us that everything is fine. Quantitative easing is working just fine (this is why on March 10 the ECB took out the atomic bomb), confidence is resuming, and the recovery is under way. In other words, apparently, an official self congratulatory EU document with little interest but for the data it collects.


euro BCE

The euro has become Draghi’s next problem

The ECB could end up with a new headache if the euro continues to appreciate as it has done over the last few weeks. In a short space of time, the eurozone currency has gone from 1,08 dollars to 1,14 dollars. Analysts believe Draghi will have to take some kind of action if it goes over 1,15 dollars.



draghi black

Super Mario’s limited powers

Mario Draghi surprised the markets with a bold move no one expected. That said, he openly conceded his margin for manoeuvre was running out. In a sincere confession few central bankers would indulge in, Draghi acknowledged there was little room for ECB’s extra rate cuts.


santander recurso

Spanish Banks Likely to Avoid the “Swiss rate” scenario

UBS | President Draghi surprised the market positively, both in terms of the magnitude of some of the expected moves (QE extension in the upper end of the range) and also implementing new measures (acquisition of non-financial IG bonds in its asset purchases, and new targeted TLTRO). For (retail) banks like the Spanish, the balance of ECB’s actions has to be considered as positive, especially if trends seen in the swap market are confirmed in Euribor fixings.


Draghi5

Swiss Experience Could Pave Draghi’s Way On Deposit Rate

The market consensus is that the ECB will cut its deposit rate at tomorrow’s monthly meeting. The question is by how much. Consensus points to 10 bps to -0.4%, while other more agressive bets point to -0.55%. Switzerland has applied a negative deposit rate since January 2015, but experience seems to show this option is counterproductive for the banking sector.